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Thursday, 28 May 20
COVID-19: A FORCE MAJEURE EVENT? - KYPRIANOU
KNOWLEDGE TO ELEVATE
While seeing the unexpected COVID-19 outbreak expanding worldwide and the first cases being identified in Cyprus, the commercial sector does not remain unaffected. Emergency measures such as travel restrictions, citizens placed on quarantine and self-isolation are only some of the factors that started to impact parties to commercial transactions that render contract performance physically or commercially impossible. May a party invoke contractually agreed force majeure clauses or, the doctrine of frustration in an attempt to protect themselves from being unable to meet its contractual obligations?
Force Majeure
The concept of “force majeure” (meaning "superior force"), is used commonly in contracts as a clause that essentially releases both parties from liability or obligation when an unexpected event or circumstance beyond the control of the parties, prevents one or both parties from fulfilling their obligations under the contract.
Determining whether the Corona-virus outbreak constitutes a force majeure event, is a matter of construction and will depend on the specific wording and the scope of the clause.
It is the case that force majeure clauses often contain a list of events that qualify as force majeure events. For instance, terms such as “epidemic”, “pandemic”, or more generic terms such as “disease” and “illness” are often expressly listed as events of force majeure. In such cases, it will be easier to claim force majeure protection, as COVID-19 is likely to qualify as a force majeure event. Also, terms such as “acts of government” or “national or regional emergency” may be listed so as to cover emergency measures taken by the government such as travel bans or placing citizens in quarantine in case of this novel outbreak.
Additionally, under common law, a party seeking to invoke that its ability to perform the contract has been prevented by a force-majeure event, has the burden to prove certain elements. These are:
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that the event was unforeseeable;
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that it has taken all reasonable steps to avoid or mitigate the effects of the force majeure event; and
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that the event was beyond its control and thus impossible to overcome.
Most importantly, there must be a causal connection between the force majeure event that made it physically or legally impossible to perform the contractual obligations. With the COVID-19 case, the affected party has to show that due to the outbreak of Corona-virus and its resulting governmental measures, no alternative measures exist for performing its duties under the contract.
Frustration
In case the contract does not include any force majeure clause, the affected party may attempt to excuse its failure to perform its contractual obligations under the doctrine of frustration. Subject to Section 56(2) of the Contract Law Cap.149, as amended, “a contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. As interpreted by Cyprus courts, section 56(2) is only applicable to an impossibility which destroys the foundation of the contract, which requires a high threshold for proof of frustration of a contractual undertaking.
Recommended actions
If you have executed a contract or are considering entering into new contract during this period, you should review the force majeure clauses carefully in order to understand the circumstances under which you can declare a force majeure and whether the Corona-virus outbreak and the resulting emergency measures may fall under its scope.
By Andria Kouloumi
Further, notification processes and deadlines should be also reviewed carefully, in order to ensure that your ability to claim force majeure protection is not precluded. Importantly, if you intend to enforce such force majeure clauses, you should consider your obligation to take all the reasonable measures to mitigate the effect of non-performance, otherwise your failure to perform your obligation may not be excused. If in doubt regarding how a force majeure provision applies and whether force majeure protection may cover you, it is recommended to seek legal advice prior to taking any action or sending notices.
Michael Kyprianou & Co LLC is ready to assist and advise you in relation to issues you may face, including by providing advice as to your options and requested objectives, enabling you to make an informed decision.
The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Andria Kouloumi, Associate, at Andria.Kouloumi (at) kyprianou.com
If you believe an article violates your rights or the rights of others, please contact us.
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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- The University of Queensland
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Renaissance Capital - South Africa
- TeaM Sual Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
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